The Federal Government’s $150,000 instant asset write-off scheme will be extended until the end of 2020 – and millions of businesses are set to benefit.
Treasurer Josh Frydenberg confirmed the program will now last a further six months, until December 31, at a cost of $300 million.
It is expected to help around 3.5 million Aussie businesses.
“(They) will be able to go and buy equipment or machinery, other materials for their business – up to $150,000 – and write it off straight away,” Mr Frydenberg told Sky News today.
“They can buy a pizza oven, they can buy a coffee machine, they can buy a new truck, a new tractor – they can buy new materials for their business.”
He said the tax incentive, which came into effect in March, would help businesses recover from the devastating COVID-19 outbreak.
“For a number of businesses it is very tough, but businesses aren’t just looking at today, they’re looking at tomorrow,” he said.
WHAT IS THE INSTANT ASSET WRITE-OFF?
According to the Australian Taxation Office, the policy allows eligible businesses to claim an immediate deduction for the business portion of the cost of an asset – for example, a truck for a delivery business or a tractor for a farming business – in the year the asset is first used, or installed ready for use.
It an be used for multiple assets as long as the cost of each individual asset is less than the relevant threshold of new and second-hand assets.
In March, the government expanded the scheme to soften the blow of the coronavirus pandemic.
Previously, it allowed businesses making $50 million per year to write off purchases up to $30,000, but it was extended to businesses making $500 million per year and purchases worth up to $150,000.
Those rules were supposed to end on July 1 this year, but will now remain until the end of 2020.
In a nutshell, it means owners can deduct the total amount of eligible purchases up to that $150,000 threshold from their tax total during the financial year the items were bought.
It can also be used by businesses multiple times.
The news comes days after Mr Frydenberg confirmed Australia had entered its first recession in almost three decades, after the economy shrank 0.3 per cent in the March quarter with a significantly larger fall expected in the current June quarter.
– With wires